It’s a new year and as we turn the page on our calendar it is the perfect time to turn a page in establishing new goals for our lives. How about this goal: Putting more money in your pocket? Revisiting your finances at the beginning of the year can allow you to establish a clear plan and improve your finances. Here are six ways to get you started in making 2025 your best year ever as suggested by financial experts.
Money.com: Revisit your budget.
“December is a great opportunity to look back at the previous year and determine whether you stayed on target. You should scrutinize your credit card statements and ask yourself: How did your plans work out? Were you able to follow your budget? Did you spend way more than you intended on, say, espresso martinis and the Eras Tour at the expense of your short-term savings for a new iPhone? You can then take what you learn and apply it to your spending plan for 2025.”
Don’t have a budget? Then this is a perfect time to start one. Investopia suggests applying a 50-30-20 budget rule. “Spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.”
Nerd Wallet: Learn from your spending habits.
“Your spending habits tell a story, and with the rising cost of living, that story may be more revealing than ever. Since it’s more expensive than ever before to live, we need to pay special attention to where our money goes. Harsh winter weather might offer the perfect excuse to stay nested indoors, curled up with your digital wallet and bank statements to trace your 2024 spending journey. The insights you glean can help craft practical spending goals for 2025.
Ready to take action on your financial review?
- Use budgeting apps like PocketSmith and Honeydue to help track your (and your family’s) spending.
- Reevaluate your credit card to ensure its rates, fees and rewards continue to align with your spending habits and financial goals.”
MSN: Audit auto-payments and subscriptions.
“People should regularly audit their auto-payments and subscriptions. Small, forgotten charges can accumulate over time, and can impact your budget.” If you don’t already have one create a list of all your auto-payments and when they come due to help you keep on top of them. And of course, after you complete the list evaluate each payment and pare back unnecessary fees from services you no longer use.
Morgan Stanley: Tackle your debt.
“Even if you’re good about managing your debt, consider taking steps to help reduce and consolidate it further. For example, if you’re expecting a raise or bonus, applying the extra income to any balances with high interest rates could help reduce your balance more quickly.”
“Then, think about consolidating any remaining debt, which may help you swap varying interest rates on multiple loans, credit lines or cards for a potentially lower rate on a single loan. Reducing the number of loans you carry can also help simplify your financial life and ease money stress.”
Investors.com: Create or evaluate your emergency fund.
"A solid cash reserve is essential to avoid liquidating investments during market downturns,". The amount of the emergency reserve will depend on the amount of liquid assets that [you] want to have on hand driven by [your] living expenses, or cost of living."
“For clients with a highly predictable income, such as a salary and W-2 employees three months of living expenses in cash [is recommended]. If you have other predictable expenditures such as a home improvement, it needs to be added to that. For entrepreneurs, whose income tends to be less predictable, [the recommendation is] closer to 12 months. For a household that has a small business with wild income swings, for example, [you should have an emergency fund of] three to six months.”
CNBC: Make sure your estate plan is up to date
“One area of financial planning that people tend to avoid is estate planning. For anyone who has young children or who owns property, it’s particularly important to make sure you complete your estate plan.”
“Estate planning does not necessarily have to be expensive. For people who have financial situations that are not complicated, there are good online estate planning resources that help prepare wills, trusts, powers of attorney and guardian nominations for minimal costs”
“Proper estate planning can help ensure your wishes for where you want your money to go are honored when you die. These areas require annual reviews to help account for life and money milestones and adjustments in your value system.”
